With the world rocked by economic turmoil, Dateline explores an alternative financial system that's secure, stable and has stood the test of time.

Officially Vanuatu is one of the world's 'least developed countries', but this is misleading. 80% of the population have almost no need for cash at all - they live on their own land and grow, fish and hunt for their food.

When they do need money, they simply make their own - traditional currencies like woven mats and pigs with tusks can be used to pay school fees and medical bills.

On the island of Pentecost there's even a traditional bank that accepts deposits of pig tusks and claims to have reserves of $1.4 billion.

WATCH - See Amos's insight into life on Vanuatu.

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Transcript

In recent years we have learnt the hard way that the world economy is interconnected. A bank collapse in New York pitching Iceland into troubles and dragging Europe down behind it. But the heavy hand of globalisation still hasn't touched some of our near neighbours. In Vanuatu recently Amos Roberts found a very different way of life.

REPORTER: Amos Roberts

Kenson and his wife Cymbol are not that different from parents across Australia. They are home owners who work hard to feed their family and give their kids a good education.

CYMBOL (Translation): Put oil on yourself and get t he comb and comb your hair. Take your baskets and let's go.

Unlike most Australian mums and dads they don't have jobs, a mortgage or even a bank account. In fact, like 80% of the population in Vanuatu, they have very little need for money at all.

CYMBOL: The only thing that we need money for is to pay for that salt so that I can give taste to our local foods. And then to make sure that our kids go to school with clean clothing. Then we need soap. And then we need kerosene to be poured into our lamps so that we could be able to eat at night with a little bit of light.

According to the UN, Vanuatu is classed as a least developed country. But poverty is relative. No-one goes hungry here. They live on their ancestral land, collect rain water for drinking and washing and grow, fish and hunt for their food. Not everything is free, but when they need money to pay for their children's school fees they can literally make their own.

CYMBOL: I pay my school fees in weaving mats like this one. I get them ready and then I get them off to school and then I pay for the school fees with mat.

Villages here and in many parts of Vanuatu can now pay medical bills and school fees with food they grow and with ceremonial wealth items like mats and pigs.

CYMBOL (Translation): Good day, Uncle.

EFRAIM (Translation): Good day

CYMBOL (Translation): I have this bundle of bananas and this red mat to pay for Andella's school fees. If it's alright with you, these bananas are worth 250 vatu and this mat, worth 2000 vatu and will go towards the fees for her second term.

In North Pentecost this mat is not just worth money, it is money a traditional or custom currency. When someone needs an extra mat for a custom ceremony they will know where to come to buy one.

EFRAIM (Translation): Kastom activities inside the community are happening all the time. Death, marriage and kastom ceremonies, peace-making. So it looks like we can say the value of the kastom mat in people's lives, it's more common than cash money.

KIRK HUFFMAN, ANTHROPOLOGIST: Most economists have no conception whatsoever that other economic systems exist in the world besides theirs and that they have existed probably from before any of the current nations in Europe were ever founded.

Anthropologist Kirk Huffman spent 12 years as curator of the Vanuatu Cultural Centre. He is now a research associate at the Australian Museum in Sydney.

KIRK HUFFMAN: Things are incredibly rare, this is fossilised clamshell money. This is blood money, this is worth a human life. This may be some of the rarest kind of money in the world. This is the incredibly rare red feather money. There may be less than half a dozen people in the world mo have the knowledge and rights to make this type of currency.

The most valuable currency in much of Vanuatu is pig.

KIRK HUFFMAN: Have a look at these circular pig's tusks from northern, central Vanuatu, this is early collections.

Pigs with special tusks are sacrificed in custom ceremonies.

KIRK HUFFMAN: But just look at this one. This pig was probably so sacred that it may have been even too sacred to sacrifice in ritual.

Sacred and in extreme pain - to grow a pig that's long in the tooth, other teeth have to be pulled out so the curling tusks can penetrate the pig's upper jaw.

REPORTER: So why has the pig become the Melanesian equivalent of the gold standard?

KIRK HUFFMAN: In certain cultures in Vanuatu the relationship between man and pigs is so close that without the involvement of pigs in your life you can never after death get to the world of the spirits. And so it's only normal in a way that pigs would develop into a certain type of currency, a sacred currency - money with legs.

EFRAIM (Translation): This one is 10,000 vatu. This is "œbobibia", you can see his tusk grows and bends and goes down a bit. This is "œmambu", it's worth 15,000 vatu. You see the tusk grows and reaches the bone.

The local school charges market rates for these, between 100 and $200 each. Bringing home the bacon on Pentecost means men like this spend years nurturing the family pigs. This one is now worth about $200.

REPORTER: You have six daughters, Cymbol. You will get a lot of pigs when they get married?

CYMBOL: Absolutely right - 10 pigs per daughter.

REPORTER: Are you looking forward to that?

CYMBOL: Of course. Hopefully some of my kids won't die. Hopefully and my care I will have 60 pigs by the time they are grown up.

REPORTER: So the daughters are also valuable because they are the key to getting more pigs?

CYMBOL: Yes, absolutely. So I'm a fortunate mother to have six daughters.

REPORTER: The son?

CYMBOL: I have to pay 10 pig force him to get married. So I'm left with 50 pigs.

REPORTER: You will be a very happy old lady. Yes. Thank you very much.

On the east coast of North Pentecost, faith in the custom economy has led to a financial revolution. Traditionally only the tusks on a live pig are valuable or on the skull of a pig that hasn't been sacrificed. But here the tusks themselves have become objects of great value. And they have built a bank to store them.

CHIEF VIRALEO BOBORENVANUA (Translation): We think that in the future, our kastom bank will work together with all the foreign banks around the world to help everyone in an economic sense.

Chief Viraleo Boborenvanua says 10,000 people from Pentecost and neighbouring islands have deposited their custom wealth here. He has invented a new unit of exchange to measure the value of pig tusks. He issues bank books and even chequebooks that can be used at some of the island's shops. Concepts of credit, debit and even compound interest do exist in the custom economy. But critics accuse Chief Viraleo of distorting custom and question the choice of a currency that's only found in some parts of Vanuatu. According to his own valuation Chief Viraleo says the bank's custom assets are worth $1.4 billion Australian dollars. But he is not worried about thieves.

CHIEF VIRALEO BOBORENVANUA (Translation): The belief is that if you come to steal from here, kastom security will affect you without your knowledge. People won't see its marks on you. People won't realise you've been shot for trying to get inside. They'll just see you lying dead. But they will not know what made you die. This is kastom security.

Chief Viraleo has effectively been printing his own money. Now he wants a licence to make it official. He has called upon the government and Reserve Bank to recognise his custom currency and agree to a fixed rate of exchange with the National currency, the vatu.

REPORTER: Do you see Chief Viraleo as a champion of tradition or as a saavy capitalist

KIRK HUFFMAN: As an innovator with a capital list tinge but many of the cultures in Vanuatu are capital list in a Melanesian way.

POLITICIAN (Translation): Why are you frightened? I see no reason. I'll give an example. If we have a big problem in Vanuatu - a small country, what will we do? We must join these big trading partners here so that with our small voice they can hear it up above.

Vanuatu's economic direction is hotly contested at the moment. National elections are being held later in the year. And politicians have come under fire for agreeing to join the WTO.

RALPH REGENVANU: The push to get Vanuatu to join the World Trade Organisation is a very good example of this having to choose where do we go in Vanuatu.

Ralph Regenvanu is an opposition MP and former cabinet minister who has championed support for the custom economy.

RALPH REGENVANU: We are promoting an economy that basically exists in 20% of the country or affects 20% of the population.

Ham Lini is currently deputy Prime Minister, the brother of the late Walter Lini, Vanuatu's independence hero. When he was Prime Minister he declared 2007 to be the year of the traditional economy.

HAM LINI (Translation): Since then, up to now, there hasn't really been any further support from the government for this to work but then the kastom currency doesn't depend on the government, it can continue being used.

Whatever its role in the country's political life, the deputy Prime Minister embraces the custom economy in his personal life.

HAM LINI (Translation): I think what I can do now in the government is try to amend the section in the constitution that speaks about vatu. Today in the constitution we only talk about vatu. It doesn't deal with the kastom economy that you're talking about.

As the world frets about the fragility of its financial system supporters of Vanuatu's custom economy say it isn't a relic from the past, that it represents hope for the future.

RALPH REGENVANU: Vanuatu is very fortunate because we can still imagine a different sort of society, a different economy, a different way of living that is not what most of the rest of the world has gone into - The local economy idea, the green economy idea, we already have it.

CHIEF VIRALEO BOBORENVANUA (Translation): The current crisis - Vanuatu has heard about it. But at the same time Vanuatu is ready - it is ready to teach all the other countries if they need help to find the good road of life.